The Consumer Federation of America is calling out the Department of Labor on its proposal to delay full implementation of its fiduciary rule another 18 months, saying the delay is a thinly veiled attempt to kill the investor protection rule using a backdoor mechanism not found in law.

Executives of the watchdog group are keeping all avenues of redress against the DOL open—including a possible lawsuit.

“If they finalize the rule as they've proposed it, then there is a strong likelihood that we would sue,” said Micah Hauptman, the CFA’s financial services counsel, in an interview with Financial Advisor. “We're not ruling anything out, and all options are on the table, but we need to see the final rule before we make a final decision about whether we'd sue.”

The CFA is responding to the DOL’s filing of a proposed rule with the Office of Management and Budget yesterday to delay full implementation of the rule from January 1, 2018, to July 1, 2019.

The fiduciary rule is designed to ensure that retirees rolling over their 401(k)s and other defined contribution plans into IRA brokerage accounts are afforded a similar level of fiduciary duty from their brokers as they’ve had with retirement accounts, which have an explicit fiduciary duty to investors under ERISA.

“The big problem is that they're using a backdoor procedural mechanism to effectively revoke critical provisions in the rule,” Hauptman said. “They can't do that and they haven't justified why they're doing it.”

“Based on the proposal, they haven't justified why they're doing this. We think they're engaging in arbitrary and capricious action. We have to see the final rule to make our determination.”

The DOL did not immediately respond to a request for comment.

The CFA has been a vocal critic of a delay of the rule for months and has stressed to the DOL in two separate letters that the agency has not provided an adequate factual or legal basis for the delay, which the federation argues is inconsistent with all of the department’s previous analysis and findings for promulgating the rule in the first place.

“This is clearly not a proposed delay; it’s a proposed stay,” said Barbara Roper, the CFA’s director of investor protection. “Rather, the intent is to grant what is effectively a revocation of the applicability of the most consequential provisions of the rule by staying them, with the goal that implementation of these provisions never occurs.”

Opponents of full implementation of the DOL fiduciary rule include the Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), the Financial Services Institute (FSI), the National Association of Insurance and Financial Advisors (NAIFA), the Insured Retirement Institute (IRI), and industry lobbyist Kent Mason of Davis & Harman.

Each opponent of the rule has written the DOL to say the fiduciary rule is harming retirement savers by depriving them of access to advice, reducing their choice of investment products and increasing their costs.

But the CFA’s Roper said there is no proof that any of that is happening. “They fail to provide concrete information that can be tested for accuracy and reliability, making it impossible for the [DOL] to substantiate their claims regarding the rule’s supposedly harmful impact.”

Roper said that while the CFA did not agree with the DOL’s first request for a delay, which the agency said would allow for more efficient implementation, it was at least a “proper purpose for a delay” as laid out in law.

The effective repeal of the DOL rule is based on wholly unproven industry assertions, argues the CFA, that the rule would make it too expensive to offer investment advice to those with accounts under $200,000.

Pershing and Envestnet executives are among strong proponents of the fiduciary rule. “I think there are still pockets of the industry that suspended either their implementation or their belief that this thing [was] actually going to take effect,” said Robert Cirrotti, the managing director of investment and retirement solutions at Pershing, in a letter to the DOL. “I think that really puts them behind the eight ball. On the flip side of that, there are plenty of other firms that are well prepared.”

Envestnet Chairman and CEO Judson T. Bergman, in his own letter to the DOL, contrasted the more “compliance-minded” firms that are adopting new programs to comply with the rule in the IRA market with those firms that are “back to the way it was earlier.”

“Most independent broker-dealers are not rushing to implement any new DOL or fiduciary-compliant programs,” said Bergman, “rather, they are allowing advisors to do business as they’ve always done it.”